McMurphy Corporation Produces a Part That Is Used in the Manufacture

question 15

Multiple Choice

McMurphy Corporation produces a part that is used in the manufacture of one of its products.The costs associated with the production of 12,000 units of this part are as follows:

Of the fixed factory overhead costs,$55,000 is avoidable.Conners Company has offered to sell 12,000 units of the same part to McMurphy Corporation for $41 per unit.
Assuming there is no other use for the facilities,Schmidt should ________.

• A)make the part,as this would save $16 per unit
• B)buy the part,as this would save $16 per unit
• C)buy the part,as this would save the company $192,000
• D)make the part,as this would save $14 per unit

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Definitions:

Sedimentary

Describing rocks formed by the accumulation or deposition of mineral or organic particles at the Earth's surface, including processes of compaction and cementation.

Gaseous

Pertaining to a state of matter that is neither liquid nor solid, characterized by free-moving particles.

Autotrophs

Organisms that produce their own food from inorganic substances using light or chemical energy, such as plants and algae.

Energy Flow

Energy flow describes the movement of energy through an ecosystem, from primary producers through various consumers, and ultimately to decomposers.